February 2002 – edition 1
Contents
Editorial ......................................................................................................................................................... 1
Covering one’s cracks................................................................................................................................... 2
CRU Appeals: the tide turns ......................................................................................................................... 3
Abuse – whose fault?.................................................................................................................................... 5
Custody issues.............................................................................................................................................. 8
No easy meat for......................................................................................................................................... 10
‘fast-food litigants’ ....................................................................................................................................... 10
Proof of the poisoning? ............................................................................................................................... 12
The ethics of evidence gathering ................................................................................................................ 13
Claims Review 2001 ................................................................................................................................... 15
Stress in the workplace ............................................................................................................................... 16
Editorial
In 1985, the highest ever personal injury award for damages in the UK was just over £430,000. By
December 1998, the figure had risen to well over £9 million. This is a staggering increase which has had
significant implications for insurers.
The reasons for this explosion in damages are various and it cannot simply be explained (as it so often is)
by the ‘claims culture’ of 21stcentury society. Longer life-expectancy is an important contributory factor.
The change in multipliers has led to a higher level of damages being awarded. Care claims have
escalated: they always exceed inflation and are increased by new manual handling regulations, more
expensive care regimes and a chronic shortage of nurses – 20,000 is the latest figure quoted. There are
new heads of claim too, such as those relating to IVF or treatment of benefits, adding to the extent of
claims.
What can be done about this is difficult to assess. It is highly unlikely that the trend will be reversed. The
burden on insurers, employers and public service providers is not going to be lessened in the future.
Where legal firms such as Berrymans Lace Mawer can help is in working closely with clients to educate
and inform, as well as in making sure that legal advice is as focused as possible on the needs of
defendants.
Good information-sharing is a vital part of this strategy. Hence this magazine, Disclosure, whose function –
as its name suggests – is to keep you up to date with intelligence about the current state of the law and to
provide an insider’s view of the legal process. We also hope that it will give you a deeper knowledge of our
activities as a firm, revealing the range of our work as well as its depth. Disclosure is part of BLM’s
information-sharing services, alongside our website, e-broadcasts and on-line case-management software.
We may not be able to halt the increase in damage awards but together we may often prevent claims from
reaching that stage.
Jenny Moates
Guest editor and partner, BLM London
DISCLOSURE
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Covering one’s cracks
Construction professionals at risk
The landmark decision in Merrett v Babb has now been confirmed by the House of Lords. In this case, the
Court of Appeal held that employees owe a permanent duty of care and can be personally liable for a
claim of negligence in the event that a dissatisfied client pursues a negligence action against an employee.
At the time of preparing a mortgage valuation, Mr Babb was a salaried employee of a firm of surveyors.
Allegedly, he failed to notice cracks in the walls of a property purchased by the Merretts. The sole principal
of the surveyors firm was subsequently made bankrupt and, contrary to RICS regulations, professional
indemnity insurance was cancelled by the Trustee in Bankruptcy without run-off cover being put in place.
As a result, Mr Babb was sued in his personal capacity for negligence in the preparation of the valuation
report. Somewhat surprisingly, Mr Babb was held to be personally liable to the purchasers in
circumstances where the report they received was silent as to who the valuer was, and in spite of the fact
that they never knew Mr Babb nor had any direct contact with him whatsoever.
Whilst it is well established that a duty of care is owed by a firm or company of surveyors to the mortgage
applicants in circumstances such as these, the principal issue in the court appeal was whether Mr Babb
also owed a personal duty of care to the Merretts.
By a majority decision, it was held that Mr Babb did owe a personal duty to the mortgage applicants. The
ruling confirmed that a professionally qualified person giving advice may owe a duty of care to the recipient
of that advice in addition to the duty owed to the employers.
The decision by the House of Lords to refuse the appeal against this decision has serious implications for
professionals. The decision as it now stands suggests that all professionals – including surveyors,
architects, engineers, accountants etc – face the prospect of personal liability in the event of a negligence
claim being made. Obviously professionals in small firms face the greatest risk.
Mr Babb was not insured. I would suggest that the prudent employee who has concerns about their
employer’s solvency, or the availability of insurance cover to satisfy claims, should consider taking out
personal professional indemnity insurance. Such insurance cover would also have to provide coverage
even after employees have left their former employers.
Michael Salau
Partner, BLM London
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CRU Appeals: the tide turns
In a landmark decision handed down on 18 May 2001 in four appeals including Secretary of State for
Social Security v Oldham MBC & others, the Tribunal of Social Security Commissioners accepted that
benefits that ought not to have been paid at all were not recoupable by the Secretary of State under the
Compensation Recovery scheme.
Under section 1(1)(b) of the Social Security (Recovery of Benefits) Act 1997, benefits should only be
included on the Certificate of Recoverable Benefits (‘CRB’) and recouped if they were ‘paid … in respect
of the accident, injury or disease’ and, under section 11(1)(b) of the 1997 Act, it is a ground of appeal of
the CRB if it included benefits that were ‘paid otherwise than in respect of the accident injury or disease’.
The Tribunal of Commissioners considered the meaning these phrases and determined that Parliament
did not intend to impose on compensators a liability to recompense the Secretary of State for benefits that
ought not have been paid, whether because the relevant accident/injury/disease had not caused the
relevant disability or because the claimant had not been as disabled or incapable as the adjudicating
authority had found. The Secretary of State’s argument – that the tribunal hearing an appeal of the
CRB was not entitled to reach a conclusion that was inconsistent with the award of benefit – was rejected.
In short, benefits that ought not to have been paid at all were not recoupable from the compensator
because they cannot be said to have been paid in respect of a relevant accident injury or disease.
In reaching their decision, the Tribunal of Commissioners accepted the compensator’s complaint that a
contrary construction of the phrase in question would have bound the compensator by a decision as to
entitlement of benefit to which the compensator was not a party and in respect of which the compensator
had no rights to make representations, and that such a construction was unfair to the compensators.
Thus the Unified Tribunal on an appeal of a CRB will now simply have to consider whether the
accident/injury/disease was an effective cause of payment of the benefit, and the compensator will be
able to pursue an argument that the claimant was not entitled to the benefit in question.
By way of an example, a compensator will now be able to argue incapacity benefit should not be
included on the CRB in a case where the claimant’s condition was such that (s)he was not in fact
incapable of work within the meaning of the relevant regulations and hence ought not have been paid the
benefit: it will be a question of fact for the Unified Tribunal to determine whether on all the evidence it finds
the claimant was entitled to the benefit.
By way of a further example, a compensator will be able to challenge inclusion of Industrial Injuries
Disablement Benefit on the CRB in a case where claimant’s injury had completely resolved and hence the
payment should not have been paid. Again of course it will be a question of fact for the Unified Tribunal to
determine whether the claimant was entitled to the benefit in question.
Since the phrase ‘paid … in respect of the accident, incident or disease’ appears in section 1(1)(b) of the
1997 Act, so that benefits should not appear in the CRB unless this test is satisfied, the arguments open
to the compensator on an appeal under section 10 of the 1997 Act can be canvassed on a review under
section 11 of the 1997 Act.
The time to apply for permission to appeal has expired and no permission to appeal was sought.
The current landscape
Unfortunately there is still some way to go before this issue is resolved. At the time certificates are issued,
the CRU is unlikely to have access to the medico-legal reports which distinguish the injuries/disabilities
caused by the accident and those which are unrelated. Also they may not bother to obtain the claimant’s
GP’s notes to check out the pre-accident history. Certificates will therefore continue to include benefits
which may not have been paid ‘as a result of the accident’. The CRU seems unwilling to amend certificates
on review on the basis that the benefits detailed were paid ‘in respect of the accident/disease’ according to
their records. This is leaving insurers with little alternative but to discharge the benefits and lodge an
appeal.
This is far from satisfactory. There are the obvious cash-flow implications of being required to discharge
the benefits before an appeal can be lodged and the DSS (from June 2001 the Department for Work and
Pensions – DWP) do not pay interest upon any sums found not to have been ‘recoverable’. Additionally
the appeals process is notoriously slow and significant legal costs can be incurred bringing, progressing
DISCLOSURE
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and hearing an appeal. There is no provision under the relevant legislation for an award of costs to be
made against the DSS where they are found to have wrongly included benefits on a certificate.
So what can insurers do?
It is important to keep up the pressure on the DWP to review all certificates where there is doubt as to
whether the benefits should have been paid. A request for a review can be made at any time and we
would recommend that this opportunity is taken in all relevant cases. Reference should be made to the
above decisions and medical reports should be disclosed together with any video evidence.
If the review(s) are not successful, an appeal should be lodged within the appropriate time limit. In cases
where there is some doubt as to whether it would be ‘economic’ to lodge an appeal (for example in smaller
cases), a request for a paper hearing can be made which reduces advocacy costs.
Unfortunately, until either the legislation is rectified or the DWP face an adverse costs consequence in
refusing (unreasonably) to amend a certificate on review, we are unlikely to see an immediate change.
However, with perseverance the DWP will have to accept that is not economic to continue defending
cases at appeal/tribunal level, and they will hopefully begin to take action at the review stage or earlier.
Ruth Graham conducted the case of Secretary of State for Social Security v Oldham MBC and Jennings
on behalf of Zurich Municipal Insurance Company. Ruth is a partner in BLM with over 20 years’ experience
handling all types of personal injury and disease matters on behalf of insurance clients.
Ruth Graham
Partner, BLM Manchester
DISCLOSURE
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Abuse – whose fault?
Child sex abuse is a subject that always raises the emotional temperature. The public supports a victim’s
call for compensation. Where does responsibility ultimately lie? – this is the question everyone wants
answered. For insurers and their solicitors, it can be considered as defending the indefensible. How then
does the law approach the question of vicarious liability, where employers are effectively substituted for
the abuser and deemed responsible for the abuse? Until recently, perhaps surprisingly, an employer has
not been considered vicariously liable for abuse by an employee – but that has just changed, as a result of
a dramatic decision in Lister v Hesley Hall Ltd (House of Lords – 3 May 2001).
In the simplest situation, compensation claims are brought after the abuser has been tried and convicted.
The victim, understandably and perhaps encouraged by hints from the police that assisting in a successful
prosecution can lead to a claim for compensation, wants someone to pay. The abuser typically has little or
no money, but – at a more basic psychological level – the victim wants the institution who gave that person
the opportunity to abuse to take responsibility. They want an apology; they want money.
Facts
In Lister, the defendant was the owner and manager of a residential school attended by the claimants.
Dennis Grain was employed by the defendant as a school warden, responsible for the day-to-day running
of a boarding house and for maintaining discipline. He used his position to abuse the claimants sexually,
and was subsequently convicted for multiple offences.
At first instance, judgment was entered for the claimants. The claim in negligence was dismissed but the
court held that the defendant was vicariously liable for the warden’s failure to report his intentions to his
employers (before the acts of sexual abuse) and the harmful consequence to the children (after the acts of
abuse).
The defendant appealed. The Court of Appeal, bound by the previous authority of Trotman v North
Yorkshire County Council, allowed the appeal. In essence, the law could not envisage circumstances
where sexual abuse would be regarded as an authorised act. If it was not authorised, the principle of
vicarious liability could not be brought into play.
The classic formulation of vicarious liability is Salmond’s statement which has survived for nearly a
century. A wrongful act is deemed to be done in the course of employment if: ‘it is either (a) a wrongful
act authorised by the master, or (b) a wrongful and unauthorised mode of doing some act authorized by
the master’.
However, Salmond offered an explanation which has sometimes been overlooked. He said that ‘a master
… is liable even for acts which he has not authorised, provided they are so connected with acts which he
has authorised, that they may rightly be regarded as modes – although improper modes – of doing them.’
House of Lords’ judgment
The matter proceeded to the House of Lords, who were asked to consider whether, as a matter of legal
principle and depending on the particular circumstances, the employers of the warden of a school boarding
house who sexually abused children in his care might be vicariously liable for torts of their employee.
The Trotman decision was overturned. Although the directors of Hesley Hall may not have been negligent
in employing or monitoring Mr Grain, they were liable for the actions he committed during his employment.
An employer will be vicariously responsible even for intentional and illegal acts by employees if they are so
connected with acts which are authorised that they might rightly be regarded as modes (albeit improper
modes) of doing them.
The focus is now firmly on the connection between the nature of the employment and the tort of the
employee. Crucially, the proper approach to the nature of the employment was said to be a broad one in
order to achieve practical justice. The defendant undertook to care for the claimants through Mr Grain and
there was a very close connection, in that the offences were committed in the time and on the premises of
the employers while Grain was caring for the children.
It would have been different had the abuser been the groundsman, for example, as he would have been
employed to look after the school’s grounds, not to have anything to do with the boys. It is a question of
degree, but there must be a greater connection between the abuse and the circumstances of the
employment than merely the opportunity to commit the act.
DISCLOSURE
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Consequences
Responsibility for sexual abuse has been fundamentally altered by this decision. Whilst there will not be
responsibility for abuse by all employees, there will be vicarious responsibility for those employed to care
for children. There are still unanswered questions on the state of the law as it now stands.
Before this decision, claims could be defended on the basis that the employer was not vicariously
responsible for the abuser’s actions as a matter of law, and that there was no evidence of any negligence
by members of staff other than the abuser (of course, only concerning ourselves with negligence before
the abuse suffered by the claimant). After the decision, it is open to a claimant to bring a claim in two
further, alternative ways:
(a)
Trespass to the person
The first is on the basis that an act of abuse constitutes a ‘trespass to the person’, with the employer
vicariously liable for that assault. A claim in the tort of trespass (as opposed to a claim based on the tort of
negligence) carries a six-year limitation period, which begins to run from an individual’s eighteenth
birthday. No child sex abuse claim can therefore be brought on this basis where the claimant is over the
age of 24. In this circumstance, limitation is an absolute defence and the court has no jurisdiction to
disapply the limitation period. See the Limitation Act 1980 s 2 and Stubbings v Webb [1993] 2 WLR 120.
(b)
Negligence of the abuser
A claimant may only be able to rely upon another way to bring his claim. The argument is that it was
negligent of the abuser not to report his intentions to his employers (before the acts of sexual abuse) or the
harmful consequence to the children (after the acts of abuse). The claimants will then say that the school
is vicariously liable for that negligence. This allows the claimant to avail themselves of the extendable
three-year limitation period open to those pursuing personal injury in negligence claims, but it is obviously
a highly artificial way of introducing vicarious (as distinct from direct) liability.
As the House of Lords overruled the previous authority on vicarious liability, it did not strictly become
necessary to consider whether vicarious liability may be based upon a failure to report sexual intentions
and misdeeds.
Lord Steyn expressed no view, saying that this line of argument may require further consideration in the
future. Lord Clyde said nothing more than that the argument seems to be a ‘somewhat’ artificial basis for
the claim, but that there was no need to explore it in the present case. Lord Hutton simply agreed with Lord
Steyn’s speech as a whole.
Lord Hobhouse was critical of the way the Court of Appeal dealt with this way of putting the case. He said
that the truth of the situation was that there was a succession of breaches of the duty of care for the
claimant by the abuser. He would therefore allow a claim on this basis.
Lord Millett, on the other hand, said that he would not have held the school vicariously liable for the
abuser’s failure to perform his duty to take care of the boys. He described this as an artificial approach
based on a misreading of other authorities on vicarious liability (albeit not in the context of abuse, whether
sexual or otherwise). He would also not base liability on the abuser’s failure to report his own wrongdoing
to his employer, which he regarded as both artificial and unrealistic. Seemingly in contradiction to what
he had decided to this point, he then said that he preferred to express no opinion on whether such a duty
existed, but – even if it did – his inclination was that it would be a duty owed exclusively to the employer
and not a duty for breach of which the employer could be vicariously liable.
Somewhat surprisingly, it remains an open question as to whether or not there can be vicarious liability for
negligence of the abuser in failing to report himself, but we can have no real confidence in the argument
being decided in a defendant’s favour. In a first instance case decided only 18 days after Lister, Douglas
Brown J expressed the view that ‘without doubt’ the Lister decision imposed vicarious liability upon the
defendant for the abuser’s breaches of duty and not only for the assaults themselves (AB & others v
Liverpool City Council & The Nugent Care Society – High Court, 21 May 2001). The case is unreported.
Such arguments can be used to a defendant’s tactical advantage, however, particularly as claimants’
solicitors will generally now be feeling that sexual abuse claims are bound to succeed as a matter of law,
provided the abuse itself is proved.
So, where are we left? Is negligence still relevant?
DISCLOSURE
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With claimants over 24, their best or only route to liability will be to prove negligence by those other than
the abuser. A decent paper trail, still in existence by the time the claim is notified, is half the battle won for
the defence of the institution. Archiving documents for a sufficiently long period is a necessity. Negligence
claims involving personal injury can be brought decades after the events in question.
More importantly, good practice in the selection, training and supervision of employees, particularly those
in areas where the employer will now be vicariously liable for abuse, will help prevent abuse in the first
place. No abuse, no claim. Insurers should be particularly vigilant where there is any scent of impropriety,
even if it is seemingly unrelated. That might be the one and only opportunity to investigate and expose an
abuser. However, employees have rights. It may be inevitable to involve solicitors to ensure there is no
claim by the employee, such as for unfair/wrongful dismissal or even defamation.
A final word of warning. Local authorities are in a somewhat special class, as they are vulnerable not only
to claims of the above type, but also to claims for negligent execution of statutory duties. Let us not also
forget the possibility of claims under the Human Rights Act. Such claims are beyond the scope of this
article, but this will be a growth area in the law over the next few years. In any case, these claims will
doubtless be pursued as an adjunct to common law claims for vicarious liability.
It is also an area where there may be law reform. Last summer the Law Commission recommended that
victims of child abuse should have no more than three years to bring a claim after reaching the age of 18
unless courts give their permission. It will not be long before the door is closed on defending trespass
claims on the unmeritorious ground that six years have passed.
Elliot Pound
Partner, BLM London
Jeremy Davies
Partner, BLM Manchester
DISCLOSURE
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Custody issues
Custody officers frequently find themselves the focus of civil claims against the police. In addition to
juggling the diverse responsibilities of the role, such as authorising detention of new prisoners and
assessing medical needs, the custody officer must ensure compliance with a wide range of requirements
under the Police and Criminal Evidence Act 1984 (PACE).
It is now established that any failure to review detention in accordance with the timetable fixed by PACE
will make a period of detention unlawful (Roberts v Chief Constable of Cheshire Constabulary). It is likely
that a successful claim will result if the claimant’s solicitors are alive to the issue. Clearly it is crucial to
check custody records at the first opportunity and to consider whether it is tactically wise to make a Part 36
offer or payment.
It is also necessary to consider the nature of the reviews themselves. Except under the explicit authority
provided by the codes of practice, the review must be carried out in the presence of the suspect. Thus a
telephone review of a suspect’s detention, making the assumption that the suspect is awake, would be
contrary to PACE and detention would be unlawful.
In R v The Chief Constable of Kent County Constabulary ex parte (1) Kent Police Federation Joint Branch
Board (2) Peter Harman (18 November 1999), the Divisional Court was asked to look at a scheme
proposed by Kent County Constabulary for the introduction of video conferencing facilities in appropriate
cases for remote custody reviews under PACE.
The Kent proposal had emerged against the background of significant reductions in the number of officers
in the Constabulary, a marked increase in the number of people detained, increasing claims against the
police and an acute strain on the police budget.
The dictionary definition of ‘presence’ is ‘the fact or condition of being … in the same place’ and the Lord
Chief Justice found it was ‘not possible, even taking a modern and progressive approach, to hold that a
record is made by a review officer in the presence of a person whose detention is under review if they are
not in the same place and in each other’s company at the time.’
Having found against the proposed video conferencing, the Lord Chief Justice went on to pass comment
on the practice of telephone reviews, which Code of Practice C, note 15c suggests are permissible in
certain circumstances. On the Lord Chief Justice’s part, he had ‘difficulty in seeing how a review
conducted on the telephone could ever comply with the requirements of Section 40 …’
The practice of conducting telephone reviews had been common, particularly within smaller forces, but the
decision of the Divisional Court on video reviews, and the reasoning behind it, effectively makes the
continued practice of telephone reviews untenable. New legislation is likely to address this issue.
Alternative approaches
If a review inspector cannot get to a police station, then the review should be postponed rather than
conducted on the telephone, with full reasons endorsed on the custody record. Alternatively, if attendance
at the police station is impossible, then a telephone review should take place, again accompanied by a
detailed reason on the custody record. Whilst this review remains technically unlawful, it at least opens the
door for legal argument to be made. It must be said that few claimants’ solicitors seem to be alive to the
point, at least for the time being.
Needless lapses in supervising detention reviews lead to successful claims. While those claims may be of
low value owing to the technical nature of the error, legal costs may be disproportionately high. A foolproof computerised reminder system is clearly a wise investment.
Meanwhile, a police force should be able to call upon the experience of a custody officer to rectify
mistakes by more junior officers. In DPP v L and S [1999] a wrongful arrest was rectified at the police
station when the circumstances were fully rehearsed to the custody officer. Failure to comply with police
powers – eg sections 25 or 28 of PACE – can be addressed by custody officers and thus liability, damages
or costs limited.
Dealing with medical issues
In the past, custody officers have been obliged to assess or handle medical problems despite minimal
DISCLOSURE
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training. This issue has been addressed by forces introducing trained nurses into custody suites. However,
the problems of assessing medical risks, particularly suicidal tendencies, remain. The issue was
addressed again in Orange v Chief Constable of West Yorkshire (The Times 5 June 2001). Fortunately,
the court repeated the principle that a duty of care did not arise unless the authority knew or ought to know
the prisoner presented a suicide risk. Custody officers could not be expected to treat every prisoner as a
possible suicide risk.
Recent cases have confirmed that a custody officer holds the key to liability in a wide range of claims.
Investigations must always take into account the role of the custody officer in authorising detention and
ensuring the treatment of suspects complies with statute. However, if forces aim to avoid liabilities, they
should follow recent PCA recommendations for more regular refresher courses on a wide range of custody
duties whether medical or simply reminding officers of the requirements of PACE in relation to particularly
litigious issues.
Jim Sherwood
Partner, BLM London
DISCLOSURE
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No easy meat for ‘fast-food litigants’
Fast-food outlets as a whole are regarded in some quarters with derision. Yet, whatever the opinion of
food critics, these restaurants offer a service where front-of-house cleanliness is not compromised in the
pursuit of a fast burger – or a fast buck – as a recent BLM case proved.
The global fast-food giant McDonald’s is a regular target for damage claims by indignant, if not necessarily
badly injured, customers. McDonald’s has a formidable hygiene and public safety regime that can well
withstand the claims culture that has arisen from 80s and 90s USA, and that has greatly minimised the risk
of losses from claims. A recent case defended by Berrymans Lace Mawer for McDonald’s and Royal &
SunAlliance demonstrates the extent to which claims-savvy is ingrained in the day-to-day workings of the
company’s franchises.
A customer, David Hunter, brought a claim against McDonald’s Restaurants after slipping on a half-eaten
burger allegedly left in the foyer leading to the toilets. He fell, injuring his left ankle. The question of
damages was agreed between the parties, subject to liability, and the claimant subsequently filed his claim
under the Occupiers’ Liability Act.
The case was first defended on the grounds of credibility. It was questioned whether the accident
happened as it had been described. Mr Bagley, an assistant manager at the restaurant and a qualified
firstaider, attended to the defendant and recollected being told that the fall took place ‘near to the patio
doors’, which were at the opposite end of the restaurant from where the claimant told the court the
accident occurred. However, Mr Bagley had been preparing to go home at the end of his shift when he
was called to Mr Hunter’s aid, and it was suggested that his haste may have affected the accuracy of his
recollection.
Suspicions were also voiced of Mr Hunter’s reliability. He was cross-examined about a previous conviction
and a series of accidents which had happened over a period, and it was asked why there was no entry in
his GP’s records. The judge chose overall to accept the claimant’s version of events, as given under oath
and broadly corroborated by the claimant’s partner who was also in the restaurant.
However, the question of compensation for Mr Hunter hinged on more than just the veracity of his
description of the accident. Sykes DJ said:
‘I accept that the accident happened in the way it was described, but in law it does not follow automatically
from that that Mr Hunter is entitled to compensation. I have to consider whether or not the defendants did
operate a reasonable system of cleaning, and in that regard the onus is on the defendants.’
The hearing shifted from the question of the claimant’s credibility to the question of the fallibility of the
defendant – the hygiene regime at McDonald’s was now on trial.
Mr Bagley was responsible for enforcing sanitation regulations, and he told the court of how the restaurant
operated a ‘clean-as-you-go’ policy, a system whereby all members of staff were required to clean up any
litter they came across at any moment. Additionally, the toilets and foyer area were inspected at intervals
of fifteen minutes by a cleaner stationed in the dining area. No records were kept of these activities, as
they were not required by the system. (One may also question whether recording such frequent
inspections would not make the cleaner’s task unnecessarily bureaucratic.)
The health & safety manager for the defendant, Mr Hathaway, described the company’s policy and its
implementation. The clean-as-you-go system and the fifteen-minute checks on the toilet and foyer area
meant there was no need for time to be allocated specifically for cleaning. Observation checklists given
to each member of McDonald’s staff ensured each employee was part of an on-going system of training
and reminding. Performance reviews were conducted twice a year using the checklists, and a health &
safety audit took place every quarter.
Sykes DJ concluded:
‘I am satisfied, having heard the evidence of Mr Bagley and Mr Hathaway, … that the defendants have a
very comprehensive system (in fact rather more than a system – it seems to be an ethos) of keeping
restaurants as clean as practicable.’
Although Mr Hunter reported that a cleaner had produced the offending part of the burger after the
accident, protesting that she had not had the chance to clean that area, Sykes DJ ruled that the claimant
was mistaken in his recollection of the cleaner’s remarks:
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‘Because of the system which I have described, there would be no allocated time for the cleaner to clean
and, therefore, any comment that she had not had time to clean, in the absence of any evidence that the
defendants knew of the presence of the food which the claimant slipped on is unlikely. No system,
however good, can cater for members of the public discarding food and rubbish shortly before another
member of the public slips.’
Thus even a potentially incriminating remark, apparently made by a cleaner, is rendered useless as
evidence by the greater corporate hygiene policy. ‘The impression I got was of a company which is a
tightly run ship, where there is constant training and there are checks on the implementation of policy,’
said Sykes DJ, before ruling in favour of the defendant with costs.
McDonald’s demonstrated not only that it was a tightly run ship but also that its ‘cleanliness culture’
was watertight.
Juliette Sherrard
Partner, BLM Liverpool
DISCLOSURE
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Proof of the poisoning?
Organophosphate poisoning seems always to be in the news and those suffering from so-called dippers’
flu bring claims very frequently. However, these are rarely successful as it is notoriously difficult to prove
the connection between exposure to OPs and any symptoms experienced. It is almost impossible to bring
a successful claim against the manufacturers, although some claims against employers have succeeded.
On 12 March 2001, the government announced a £1.4m research programme into the effects of OPs,
funded jointly by the Ministry of Agriculture, Fisheries and Food (now the Department for Environment,
Food and Rural Affairs – DEFRA), the Department of Health and the Health & Safety Executive. The study
is being undertaken by the London School of Hygiene and Tropical Medicine.
Insurers will be watching the results of the study with care, as previous studies have been inconclusive
– particularly the pilot study funded by the Legal Services Commission (formerly the Legal Aid Board) into
the probability of chronic exposure to small amounts of OPs giving rise to actionable symptoms. Despite
legal and experts’ fees exceeding £1m, this study produced no positive results.
Berrymans Lace Mawer is currently defending a series of OP claims. In one extreme case, a complete
team of five medical and chemical experts has been abandoned and the claimants have been forced to
start again, years into the litigation, with new experts. Surprisingly, the court was prepared to allow this –
although with reluctance.
Tyrer v Clwydd CC and others
A multi-party group of claimants was formed in December 1998 to draw together all actions involving
alleged OP poisoning from sheep dip. Approximately forty cases were involved, most of which were
covered by a generic legal aid contract awarded to lead solicitors. As a result of the failure of the pilot, and
the fact that there was no adequate alternative medical evidence on which claimants could rely, the lead
solicitors advised that there was insufficient chance of success in the claims and that legal aid should be
discharged. It was a significant blow to claimants that reports they had commissioned from Dr Sarah
Myhill, a GP who has been campaigning for some time to have OP poisoning taken seriously, had been
ruled inadmissible.
The defendants were employers sued by employees alleging exposure to OPs in the course of their
employment, and also manufacturers of the chemicals involved. Before the discharge of legal aid, a
number of employers and manufacturers, including our clients, had issued Part 24 applications to have the
claims struck out on the ground that there was no reasonable prospect of success. Despite the discharge
of legal aid, the Legal Services Commission restored legal aid for the specific purpose of defending the
Part 24 applications. Eleven Part 24 applications were listed before Mr Justice Morland at the Royal Courts
of Justice on 23 July 2001 and were heard together over a five-day period.
Preliminary judgment was given on 31 July 2001. The judge observed that the claimants had suffered from
their inability to obtain evidence from appropriate experts to prove causation. Until a late stage in the
hearing, he had hoped to be able to give the claimants a last opportunity to pursue their claims, but had
reached a firm conclusion that he would be failing in his duty if he did not bring the group litigation to an
immediate end. After the pilot study it was clear that the cases were unviable. The defendants had
invested hundreds of thousands of pounds in investigating liability, and in his judgment it would be
oppressive to the defendants to allow the claimants to continue the group claim.
Final written judgment was given on 9 November 2001. The court confirmed its conclusion that on the
evidence as it stood the claims were unviable, that the group action would fail and that it would be unjust
and oppressive to the defendants to allow it to continue in the hope that better evidence might be adduced
at some stage in the future.
Perhaps the most unusual facet of this case was the decision of the claimant group’s legal advisers to post
on the internet an announcement about the advice they had given to the Legal Services Commission in
relation to the group litigation. Whilst this was intended only for consumption by members of the group, it
quickly became public knowledge, and counsel for the defendants took the opportunity to read out to the
judge – with no objection from the claimants – those parts of the announcement in which the claimants’
advisers stated that they had been forced to conclude that there was little realistic prospect of establishing
causation.
David Evans
Senior Partner, BLM Liverpool
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The ethics of evidence gathering
A recent case involving Berrymans Lace Mawer has highlighted the need for fair dealing and directness
amongst those in the insurance world whose job it is to investigate the question of whether a claim is
covered by a policy. Claims inspectors, loss adjusters and enquiry agents should take note of Matalan
Discount Club v Tokenspire Properties: the judgments arising from this case expose how flawed or
fraudulent procedures of gathering evidence can severely undermine an insurer’s cause in court.
Matalan and Tokenspire were respectively the tenants and landlords of a building which suffered serious
water damage in the course of re-roofing works. Matalan sued Tokenspire for the damage caused by the
rain-water, claiming it had breached a clause in the lease for ‘quiet enjoyment’ by permitting the
re-roofing contractor, Richmond Cladding Systems, to undertake the works. Tokenspire was successfully
defended by David Thomas of Berrymans Lace Mawer, and after the failure of Matalan’s action, both
parties sued Richmond, the contractor.
Richmond in turn looked to its liability insurers for cover, but this was refused on the basis of a breach of
warranty.
Unusually, the insurers tried to argue that Richmond should not be covered because they had breached a
warranty in the insurance policy that stated they should take reasonable precautions. It was established
over 30 years ago in Fraser v B N Firman (Production) Limited [1967] 2 Lloyd’s Rep 1 that a policyholder
should only be held in breach of such a warranty if he had been reckless in his conduct, ie he had
recognised the risk and had made a conscious decision not to take adequate precautions. It is notoriously
difficult to argue for a breach of warranty to take reasonable precautions, and it was not enough in this
case just to show that the roofing works were conducted negligently – there had to be evidence to support
the charge of recklessness.
Some of the evidence was procured by loss adjusters representing Richmond’s insurers. Not long after the
incident, they interviewed employees of Richmond about why parts of the roof were left unprotected during
heavy rain. The loss adjusters did not tell the employees of Richmond, nor any of their superiors, that the
question of a breach of warranty was being considered. The information given by the unsuspecting
employees about the background to the contract was fairly candid. In the written versions of these witness
statements, the loss adjusters identified passages that seemed to imply there was a motive for rushing and
bodging the work. These were then used as the first plank of a ‘recklessness case’ which, if successful,
would have deprived Richmond of cover and our client of indemnity.
HHJ Seymour was scathing about the method with which the evidence was collected, as well as the
decision to rely on it:
‘I should not leave the question of statements taken by [XYZ] without recording my disquiet about the
circumstances in which these statements were obtained. In the context of a debate as to whether one or
more of the statements was the subject of legal professional privilege, I was told that at the time the
statements were taken, solicitors had been instructed on behalf of Crowe [Richmond’s insurers] and the
question of cover was under active consideration. It seems to me that it was totally inappropriate in these
circumstances for statements to be taken from Mr G, Mr F and Mr C, without Richmond being warned that
cover was in question and being given an opportunity to obtain independent advice. The fact that the
statements gave an emphasis to matters bearing upon cover with which the maker of the statement may
well not have agreed had he appreciated the significance which could later be attributed to such emphasis
only serves to underline the impropriety of the procedure, it seems to me.’
Although the statements were admitted in evidence, little weight was given to them, especially when their
makers contradicted them in court. Not surprisingly therefore, Richmond’s insurers did not succeed in
showing breach of warranty because there was no serious evidence to support recklessness.
Similarly in (1) Aquarius Finance Enterprises Inc (2) Bernard Delettrez v Certain Underwriters at Lloyd’s
(Commercial Court – 30 April 2001), the court was condemnatory of evidence advanced to support an
allegation that the owner of a yacht was making a fraudulent claim. Although the insurers succeeded in
that case, it was certainly not on the basis of evidence that an agent bullied one witness into giving.
What lessons are we to draw from this? Obviously, a firm and purposeful line of questions needs to be
directed at policyholders suspected of fraud. Insurers, who are already at a considerable disadvantage in
the fraud game, can hardly be prevented from asking such questions. But all who investigate cover issues,
including fraud, must know that being tendentious or manipulative with witnesses is not the way to get
reliable evidence. If someone’s words are twisted into saying what they do not intend, it tends to show up
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in court with disastrous results. It might not always be necessary to tell the witnesses that one suspects
a fraud, or even that cover is under consideration, but it is important to ask straightforward questions,
record straightforward answers, and to treat, and be seen to treat, the witnesses with fairness.
Catherine Hawkins
Partner, Head of Property Insurance and Recovery, BLM London
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Claims Review 2001
Seminar report
The annual Claims Review seminars are something of a tradition with Berrymans Lace Mawer. The broad
intention behind these seminars is to give organisations that work at the receiving end of liability claims a
better understanding of how claims arise and how they may be dealt with, in such a way that the damage
from them can always be limited.
This year’s Claims Review seminars were held in London, Manchester and Birmingham. The whole-day
events took place over a period of two weeks in late September and early October and attracted upwards
of 300 delegates in total, representing the major UK insurers, large publicly listed companies, local
authorities, brokers and loss adjusters. The venues chosen ranged from the opulent Burlington Hotel in
Birmingham, to the modern Marsh Centre in the City of London.
The mandate for this year’s Claims Review was to tackle the increasingly aggressive ‘claims culture’ taking
shape after recent changes to insurance law. General damages have increased and future losses are
expected to be even higher. Furthermore, losing defendants could soon be paying additional charges – a
conditional fee insurance – alongside their opponent’s legal fees. In stark terms, the cost of losing a claim
has never been higher for the defendant.
Partners and solicitors from Berrymans Lace Mawer addressed the audience on recent legal
developments across a range of issues, from motor claims, occupational disease and local authority
liability to police claims, corporate killing and the award of quantum. Guest speakers from the medical and
occupational consultancy ReIntra, spoke of the need for a considerate rehabilitation process for the victims
of occupational injuries and disorders. The conference-packs contained programmes, the latest
information on the Woolf reforms and the Sarwar v Alam case, as well as a disk containing papers
supporting the day’s presentations.
The seminars demonstrated how an informed, confident approach could turn the new funding options for
claimants to the advantage of defendants. Martin Bruffell, Senior Partner at BLM Southampton chaired all
the seminars: ‘Cases are being won for defendants on grounds of procedure, straightforward liability and
foreseeability; it is, if anything, more cost-effective now for the defendant to fight cases and win.’
Response from the audience was enthusiastic, and many remarked on the effectiveness of the practical
session on costs, conducted by BLM London partner Nick Pargeter. Martin Bruffell continued: ‘Between
thirty and forty percent of a liability insurers’ claims spend will be on cost – and the bulk of that goes to the
claimant. We showed how this spend can be significantly reduced by challenging the claimant on CFAs
[conditional fee agreements] and success fees, as well as by ensuring that disputed cases are dealt with
appropriately – which does not necessarily always mean going to court.’
The seminar was rounded off with the ‘Quantum quiz’. For the first prize of a magnum of champagne,
delegates were asked to estimate the quantum awarded in a historic liability case. The award of the prize
was followed by a reception for delegates and speakers. From the delegates’ discussion of the day’s
events, it was obvious that Martin Bruffell had been disarmingly modest earlier in saying that the Claims
Review was ‘just a way of keeping everybody up to date with the law.’ BLM’s service to clients goes
beyond the mere communication of updated legal information. It extends to consultation on risk
management and rehabilitation, with the eventual aim of demystifying the legal process for defendants
without oversimplifying it.
What was the most important lesson of this year’s Claims Review? ‘More than anything,’ concluded
Bruffell, ‘I hope we have stressed the need for insurers to develop appropriate before-the-event insurance
policies. Start spreading the cost between the many rather than the few – that, I believe, is how the
insurance industry can emerge stronger and healthier from the challenge of change.’
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Stress in the workplace
The Court of Appeal’s decision in Hatton and others
On 5 February 2002, the Court of Appeal handed down a judgment reversing three out of four County
Court decisions concerning claims arising from stress at work. As a result, three employees were denied
previously awarded damages which totalled almost £200,000.
The Court of Appeal used the hearing to clarify this high-profile and contentious area of law. Its judgment
gives much awaited guidance on the evidential and legal ingredients that are essential if an employee is
to bring a successful action against his employer for work-induced psychiatric injury.
Employers and insurers can take comfort that the Court of Appeal decision does not create any new
principles of law. This type of claim follows the standard principles governing personal injury claims,
namely whether there was a breach of the employer’s duty of care which caused psychiatric harm to an
employee, and whether the psychiatric harm to that particular employee was reasonably foreseeable. In
other words, a claim can still only succeed where
■
the work or working conditions are such that no ordinary prudent employer could have failed to
recognise a risk to the claimant’s mental health;
■
and, given this risk, the employer ought to have taken action to review the conditions with the
employee’s health in mind, but failed to do so.
The judgment
Mrs Hatton and Mr Barber were teachers in comprehensive schools, Mrs Jones was an administrative
assistant at a local authority training centre and Mr Bishop was a factory worker. They were all awarded
damages against their employers for psychiatric illnesses that prevented them from continuing to work. All
four employers appealed. The appeals by the employers of Hatton, Barber and Bishop were allowed; Mrs
Jones’s award was upheld but ‘not without some hesitation’.
When imposing duties upon employers or setting standards for them, the court had to consider two
opposing and persuasive arguments:
■
Firstly, it is important that employers recognize the existence of occupational stress and that
they prevent harm to their workforce, so that the efficiency of a commercial operation is not
jeopardised by avoidable employee illness.
■
Secondly, it is equally important that the court should remain mindful of commercial realities and
not place too onerous a duty of care upon the employer. This could make employers reluctant to
employ people with psychiatric problems, however slight, or lead them to make intrusive
investigations into a potential employee’s health.
If stress-related problems are unduly likely in a particular job, the employer should set up a system to
detect stress and prevent its development. This would be better accomplished through regulations and
statutory duties than through an appeals court.
Foreseeability, duty of care and breach of duty
In considering foreseeability, the question was simply whether or not the injury was foreseeable. It was
accepted that it will always be harder to foresee a psychiatric injury than a physical one. Stress is
subjective: it is not a product of the job itself, but of the interaction between the individual and the job.
Unless an employer knows of a particular problem or vulnerability with an employee, he is usually entitled
to assume that his employee can cope with the normal pressures of the job. Only if the employer is unduly
concerned should he arrange for the employee to consult a doctor or an occupational health service.
An employer has a duty to act once there is sufficient indication that action is required. In this case, it is
necessary to assess whether an employer could have taken measures to avoid the problem – offering a
sabbatical, a transfer, redistribution of work, treatment or counselling. The size and scope of the business
is also significant in judging whether such action is reasonable in a particular case.
Causation and quantum
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Claimants have to show that they suffer from a genuine psychiatric injury. Whilst it may be difficult to draw
a line between an unpleasant emotional state and recognised psychiatric illness, there is now a
considerable international agreement on diagnostic criteria and the classification of mental disorders (see
the Diagnostic & Statistical Manual of Mental Disorders (DSM–IV, American Psychiatric Association 1994)
and the International Statistical Classification of Diseases and Related Health Problems (ICD–10, World
Health Organisation 1992)).
Having proven a psychiatric injury and a breach of duty, the claimant has to show that the particular
breach(es) of duty caused them harm – it is never enough merely to show that the injury was caused by
stress at work.
Where there are several different possible causes of psychiatric illness, the claimant may have difficulty
proving that the employer was responsible for one of them (see Wilsher v Essex Area Health Authority
(1988)). Therefore the claimant has to show that a breach of duty made a material contribution to
causation (see Boddington Castings v Wardlaw (1956)).
In the event of multiple causation of a psychiatric injury, attempts should be made to apportion causation
and quantum between these different causes. In principle, there is no reason why psychiatric injury should
be differentiated from ‘divisible’ (or dose-related) occupational diseases such as noise-induced hearing
loss and asbestosis. Unless the harm is truly indivisible, employers should only pay for the proportion of
the damage which is attributable to their wrongdoing or negligence. The evidential burden of establishing a
case for apportionment will rest on the defendant.
Where a breach of duty has exacerbated an existing predisposition or disorder, an award for pain,
suffering and loss of amenity will reflect only that exacerbation. Further, a quantification of damages for
financial loss must take into account contingencies such as the chance that a claimant would have
developed a stress-related disorder in any case. This may be reflected by reducing the multipliers for
future losses (see Page v Smith (1993)).
What now?
The reaction by employees’ rights groups has been mixed, although parties representing employees and
employers alike have expressed some relief that this seemingly ambiguous area of law has received
clarification. We now wait to see whether the Health and Safety Commission will recommend specific
statutory regulations to govern employers’ duties in this area. In the meantime, this judgment reinforces
the position that a claimant must clear sizeable hurdles to succeed in a work-related stress claim.
For further discussion of this or other occupational stress claims, contact Boris Cetnik (partner, BLM
London) on 020 7638 2811.
…
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